January 2025 Grade 12 Economics Exam PDF

January 2025 Grade 12 Economics Exam Study Guide Macroeconomics. The economic problem: The economic problem is How a society produces and distributes the goods and services it needs to survive and if possible thrive though resources are scarce. Three solutions to the economic problem: 1.​ Mar...

January 2025 Grade 12 Economics Exam Study Guide Macroeconomics. The economic problem: The economic problem is How a society produces and distributes the goods and services it needs to survive and if possible thrive though resources are scarce. Three solutions to the economic problem: 1.​ Market economy (price system)(traditional) 2.​ Command economy (planned economy) 3.​ Mixed economy Market economy - uses supply and demand to allocate goods and resources. Market economy is also known as capitalism. Businesses and individuals make their own decisions and prices are set by the market. Examples; US, Australia, and singapore. Command economy - uses centralized control to allocate goods and services. The government controls what is produced and how it's distributed. Examples; communist countries and dictatorships like Cuba, nazi Germany, and North korea. Mixed economy - uses both supply/demand system (market economy) and some government control (command economy) to allocate goods and services. Allows for individuals and private companies to operate but also allows for government intervention in economic activity. Examples; Germany, Canada, and the UK. GDP (Gross Domestic Product) - Measures the health of a country's economy by the value of their economic activity (outputs/production) in a given period of time (usually a year). The four streams of GDP are: -​ Consumer spending/consumption -​ Government spending -​ Net exports -​ Total investment GDP = Consumer Spending + Business Investment + Government Spending + Net Exports. Government purchases: all spending on goods and services by the government on a federal, state and local level. Transfer payments: monetary payments or transfers of goods and services made by a government or other organization to a third party. government purchases of consumption goods: These are purchases of goods and services that directly satisfy the needs of the community. Examples include spending on public education and national defense. investment spending: These are purchases of goods and services that create future benefits for the community. Examples include spending on highway construction and military hardware. Key differences between household consumption and business investment: Definition ​ Household consumption: Spending on goods and services for personal use ​ ​ Business investment: Spending on fixed assets, such as machinery, equipment, and intellectual property Relationship to the business cycle ​ Household investment: More volatile than business investment, and leads the business cycle ​ Business investment: Lags the business cycle, and is more correlated with past output The relationship between household savings and business investment: Household savings are a key source of funds for business investment, which is a major driver of economic growth. Business growth makes: -​ More jobs -​ Stronger economy -​ Economic growth -​ Higher demand and supply What a nation’s money represents: A nation's money represents the value of the goods and services in that country. It also symbolizes the country's wealth, prosperity, and economic stability. Has three functions: -​ store of value -​ unit of account -​ medium of exchange